Borrowed Time: The Truth about America’s Deficit
America’s federal budget has been bleeding red ink for decades—but today’s deficits are unlike anything we’ve seen before. As the national debt races past historic highs, the question isn’t only how we got here—but what happens next.
Make no mistake, balancing the federal budget is complex. Many parts of the budget are dynamic, making it easier for politicians to cherry pick elements within the budget that look favorable, and ignoring or minimizing the aspects that don’t look so good. The Committee for a Responsible Federal Budget (CRFB) can help.
The key is to look at the amount of money in the federal budget that is borrowed each year for deficit payments. These funds are used to pay off federal debt and interest payments. It is the only area in the federal budget that offers nothing in return. In simple terms, a deficit occurs when the federal government’s annual spending exceeds its revenues.
In this current year, the federal government has spent $1.05 trillion more than it has collected in fiscal year 2025, resulting in a national deficit.
Meanwhile, the national debt ($36.21 trillion) is the total amount of debt accumulated by the U.S. Federal Government over the nation's history. Of course, borrowed money must be paid back with interest…adding to the deficit. The place to begin reducing the national debt is to first balance the federal budget by reducing the deficit.
That’s not set to happen this year in Congress. The House is scheduled shortly to address the “One Big Beautiful Bill”, the massive budget reconciliation bill crafted by the Trump administration. The CFRB estimates the House bill would boost the FY 2027 deficit which currently stands at 6.4%. Under the legislation, the deficit in the first year will increase by nearly $600 billion, or 1.8 percent of Gross Domestic Product. That’s the net effect of roughly $770 billion of new borrowing and only $180 billion of offsets.
To be clear, the House bill, if passed as is, would add to the deficit every single year. The possible exception is 2025, which would be due to one-time cuts from the Department of Government Efficiency (DOGE). Note that many of of the proposed cuts are being legally challenged and may not occur.
Some Republicans are concerned. Recently, Senator Ron Johnson (WI) stated, “At a bare minimum, the “One Big Beautiful Bill” shouldn’t increase the annual deficit. With the meager spending reductions being discussed, I’m afraid it actually will. We must return to a reasonable pre-pandemic level of spending.”
At the same time, White House Press Secretary Karoline Leavitt on Monday insisted that the bill would actually save the federal government $1.6 trillion: “This bill does not add to the deficit,” she told reporters. “It is the largest savings for any legislation that has ever passed Capitol Hill in our nation’s history.” However, Leavitt is only referring to the budget reductions through the proposed actions of DOGE. The increased spending in areas such as defense and homeland security, as well as revenue reductions through tax breaks mean the bill will actually move the federal government further away from a balanced budget.
While both parties are talking about deficit reduction, they put the blame on the other party. A balanced budget can only occur if the major parties find ways to work together. When the federal government last maintained a balanced budget in the 1990’s and early 2000’s, a strong third party candidacy by Ross Perot stoked popular awareness of the issues surrounding federal deficit spending. As a result of this public pressure, the two major parties worked together to balance the budget. These conditions are not present in 2025. The two major parties are not working together and will continue to resist doing so unless the public speaks out…now.
The path forward will demand tough choices—whether through reining in spending, boosting revenue, or reimagining how government works. One thing is clear: how we confront the deficit now will echo through America’s economic story for generations.
Lee Rasch
